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HMRC's offshore compliance strategy now aims at mistakes and avoidance

Thursday, 14 March, 2019

The UK government has issued a new strategy paper, No Safe Havens 2019, on offshore tax enforcement; establishing new objectives and summarising the 'substantial progress' in tackling offshore non-compliance since the last strategy in 2014.

The previous strategy, says HMRC, was highly successful, with the introduction of over 100 new compliance measures since 2010. Offshore measures alone have raised GBP2.9 billion since 2010, along with new offences and increased sanctions for evaders and those who help them. International information exchange agreements have also helped its efforts; in 2018, HMRC received information about the offshore financial interests of around three million UK resident individuals, or entities they control.

However, the 2014 strategy was focused mainly on countering tax evasion, it says. The next phase will address customers who pay too little offshore tax for reasons other than deliberate evasion, such as making mistakes, or attempting to avoid tax by exploiting the rules.

'This strategy sets out how we will tackle the whole problem of offshore tax non-compliance across that spectrum of behaviours, and all our customer groups', says HMRC. 'This includes working with agents and intermediaries to help their clients avoid errors and make it simple for them to identify and correct errors. The unprecedented amount of data that HMRC is receiving from a range of sources is at the heart of our approach.'

The organisation also promises that, where it intervenes, it will use an approach that is appropriate and proportionate to the tax at risk and the customer’s behaviour.

'UK tax obligations for non-UK income, gains and transfers can be complex', it says. 'We understand that as a result some customers inadvertently pay less tax than they should by making mistakes or relying on out-of-date advice. We will improve voluntary compliance through education, aiding customers’ understanding of offshore compliance and developing ways to prompt customers or remind them of their obligations...Where HMRC intervention is required, we will always seek to work collaboratively with our customers’ agents to help correct mistakes and resolve disputes. We will review ways in which HMRC can better help the compliant majority of agents and intermediaries.'

Sources